Good morning and welcome to the AGRI Realty 3rd Quarter 2025 Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touchtone phone. To withdraw your question, please press star, then 1 again. Please limit yourself to two questions during this call. Note, this call is being recorded. I would now like to turn the conference over to Ruben Treatman, Senior Director of Corporate Finance. Please go ahead, Ruben.

Good morning, everyone, and thank you for joining us for AgriReality's third quarter 2025 earnings call. Before turning the call over to Joey and Peter to discuss our results for the quarter, let me first run through the cautionary language. Please note that during this call, we'll make certain statements that may be considered forward-looking under federal securities law, including statements related to our updated 2025 guidance. Our actual results may differ significantly from the matters discussed in any forward-looking statements for a number of reasons. Please see yesterday's earnings release and our SEC filings, including our latest annual report on Form 10-K for a discussion of various risks and uncertainties underlying our forward-looking statements. In addition, we discuss non-GAAP financial measures, including core funds from operations, or core FFO, adjusted funds from operations, or AFFO, and net debt to recurring EBITDA. Reconciliations of our historical non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release, website, and SEC filings. I'll now turn the call over to Joey.

Thanks, Ruben, and thank you all for joining us this morning. I'm pleased to report another very strong quarter at ADC as we further expanded and strengthened what we view to be the nation's leading retail portfolio. The unmatched value proposition of our three-pronged approach continues to drive a compelling opportunity set and expansive pipelines across all platforms. We achieved our largest quarterly investment volume since the deaths of COVID five years ago, deploying over 450 million dollars across all three platforms while maintaining a high level discipline in our underwriting process. Given growing pipelines across our three external growth platforms, we are increasing our full year 2025 investment guidance to a new range of $1.5 to $1.65 billion. At the midpoint, this represents an increase of over 65% above last year's investment volume. This exceptional level of activity demonstrates our ability to efficiently scale our investment platforms while partnering with the best retailers in the country. We will continue to be disciplined capital allocators while maintaining our stringent real estate quality underwriting standards. Our best-in-class portfolio is paired with a Fortress balance sheet that has over $1.9 billion of liquidity and no material debt maturities until 2028. With pro forma net debt to recurring EBITDA of just 3.5 times and over $1 billion of forward equity available to us. We enjoy a significant runway and have pre-funded our growth well into next year. During the quarter, we received an A- issuer rating from Fitch Ratings, making us one of only 13 publicly listed U.S. REITs with an A- credit rating or better. This was a significant milestone for our growing company and is a testament to over 15 years of disciplined growth and keen portfolio construction, having invested over $10 billion during that period while maintaining a preeminent balance sheet and leading the way on capital market activities. Given our robust liquidity profile, fortress balance sheet, and strong portfolio performance, we are raising our ASFO per share guidance to a new range of $4.31 to $4.33 for the year. The new midpoint represents approximately 4.4% year-over-year growth. Peter will provide more details on our guidance momentarily turning to our three external growth platforms during the third quarter we invested over 450 million in 110 high quality retail net lease properties across our three platforms this includes the acquisition of 90 assets for over 400 million dollars the properties acquired during the quarter leads to leading operators and home improvement auto parts grocery off price farm in rural supply, convenience stores, and tire and auto service. The acquisitions had a weighted average cap rate of 7.2% and a weighted average lease term of 10.7 years. Investment-grade retailers accounted for 70% of the annualized base rent acquired, the highest mark so far this year. Notable transactions during the quarter included a sale-leaseback with a relationship tenant in the tire and auto service sector, multiple Aldi's, a high-performing Kroger in Cincinnati, a Sherwin-Williams portfolio, a Home Depot in New York, as well as a Walmart Supercenter in Illinois. For the first nine months of the year, we've invested nearly $1.2 billion across 257 retail net lease properties, spanning 40 states and 29 retail sectors. Approximately 1.1 billion of our investment activities originated for our acquisition platform, with the remainder emanating from our development and developer funding platforms. During the third quarter, we commenced five development or DFP projects with total anticipated costs of approximately 51 million dollars. We are well on our way to commencing over 100 million of projects in the second half of the year, as discussed on last quarter's call. Through the first nine months of the year, we've committed approximately $190 million across 30 projects that are either completed or under construction, representing a significant increase in development in DFP spend compared to prior years. We remain confident that we'll achieve our medium-term goal of $250 million commenced annually. In the third quarter alone, we invested a record of approximately $50 million across 20 development in DFP projects, representing a two-fold increase in capital deployment quarter over quarter. These platforms are a growing component of our investment strategy, allowing us to partner with best-in-class retailers and private developers to add high-quality real estate to our portfolio at superior returns that we can achieve via acquisitions. Of note, during the quarter, we commenced construction on two of our first 7-Eleven developments. Located in Michigan and Ohio, we anticipate total cost for the two projects will be approximately $18 million. The Ohio location marks our first commercial fueling site for 7-Eleven, a compelling addition to our large format convenience store portfolio. These projects underscore the strategic depth of our relationship with yet another leading retailer. We're delivering our full complement of capabilities, roundup development, developer funding projects, as well as acquisitions. I look forward to providing more details as we continue to roll out additional projects in the coming quarters. On the asset management front, we executed new leases, extensions, or options, and approximately 860,000 square feet of gross leasable area. during the quarter, including a 50,000-square-foot TJ Maxx and Home Goods Combo in Eugene, Oregon, a 27,000-square-foot Burlington in Midland, Texas, and two Walmarts comprising over 310,000 square feet. For the first nine months of the year, we executed new leases, extensions, or options on 2.4 million square feet of gross leasable area, with a recapture rate of approximately 104%. We are in an excellent position for the remainder of the year, with just nine leases or 20 basis points of annualized base rents maturing. Dispositions this quarter totaled approximately $15 million and included our only at-home in Provo, Utah, as well as three advanced auto parts. The at-home disposition is emblematic of our underlying focus on real estate. The disposition cap rate of approximately 7% is nearly 50 basis points inside of where we acquired the asset. resulting in an unlevered IRR of approximately 9%. Our best-in-class portfolio now spans over 2,600 properties across all 50 states, including 237 ground leases, representing 10% of total annualized base rents. Occupancy for the quarter remained very strong at 99.7%, and our investment-grade exposure remained sector-leading at 67%. Heading into the fourth quarter, I'm extremely excited to wrap up the year as we head into 2026 in a tremendous position as our earning algorithm kicks into gear. I'll now hand the call over to Peter, and then we can open it up for questions. Thank you, Joey.

Starting with earnings, core FFO per share for the third quarter of $1.09 was 8.4% higher than the same period last year. AFFO per share for the third quarter increased 7.2% year over year to $1.10, which is two cents above consensus. A portion of the BEAT is attributable to lease termination fees, which contributed roughly a penny to AFFO per share in the quarter. As Joey highlighted, we have updated our 2025 earnings outlook to reflect our strong performance year to date. We raised both the lower and upper end of our full year of ASFO per share guidance to a new range of $4.31 to $4.33, which implies year-over-year growth of approximately 4.4% at the midpoint. Our new guidance range includes an assumption for approximately 25 basis points of credit loss for the year. As a reminder, the Treasury stock method impact is included in our diluted share count prior to settlement if ADC stock trades above the net price of our outstanding forward equity offers. The aggregate dilutive impact related to these offerings was fairly de minimis in the third quarter. Our updated guidance range contemplates a minimal treasury stock method dilution in the fourth quarter as well, though that remains subject to how the stock trades for the remainder of the year. For full year 2025, we still anticipate roughly a penny of dilution related to the treasury stock method, largely given the impact recognized in the first half of the year. In the third quarter, we declared monthly cash dividends of 25.6 cents per share for July, August, and September. This represents a 2.4 percent year-over-year increase. While raising our dividend twice over the past year, we maintained conservative payout ratios for the third quarter of 70 percent of core FFO per share and AFFO per share, respectively. Subsequent to quarter end, we again increased our monthly cash dividend to 26.2 cents per share for October. The monthly dividend reflects an annualized dividend amount of over three dollars and fourteen cents per share or a three point six percent increase over the annualized dividend amount of three dollars and four cents per share from the fourth quarter of last year. Moving to the balance sheet, as Joey mentioned, in August we achieved an A-minus issuer rating from Fitch with a stable outlook. This significant accomplishment is a testament to the strength of our portfolio as well as our balance sheet and reflects the thoughtful and disciplined way we have and will continue to grow the company. The A- rating reduced the interest rate on our 2029 term loan by five basis points. In addition, the F1 short-term rating assigned by Fitch translated into a similar pricing improvement for our commercial paper notes. During the quarter, we settled approximately 3.5 million shares of forward equity for net proceeds of over $250 million. dollars as of september 30th we had approximately 14 million shares remaining to be settled under existing forward sale agreements which are anticipated to raise net proceeds of over 1 billion dollars upon settlement at quarter end total liquidity stood at 1.9 billion dollars including cash on hand forward equity as well as over 850 million dollars of availability on our revolving credit facility which is net of amounts outstanding on our commercial paper program. Pro forma for the settlement of all outstanding forward equity, our net debt to recurring EBITDA was approximately 3.5 times. Excluding the impact of unsettled forward equity, our net debt to recurring EBITDA was 5.1 times. Our total debt to enterprise value was approximately 29%, while our fixed charge coverage ratio, which includes principal amortization and the preferred dividend, remains very healthy at 4.2 times. Subsequent to quarter end, we further strengthened our balance sheet, securing commitments for a $350 million, 5.5-year delayed draw term loan that will mature in 2031. We anticipate closing later this quarter and have entered into $350 million of forward-starting swaps to fix SOFR until maturity. Including the impact of the swaps, the interest rate on the term loan is fixed at approximately 4% based on our current A-minus credit rating. The term loan demonstrates continued strong support from our key banking partners and enables us to fill a gap in our debt maturity schedule while achieving opportunistic pricing in today's rate environment. Upon closing, the terminal will increase our pro-forma liquidity to approximately $2.2 billion, and we have now locked in attractively priced equity and debt capital to fund our growth well into 2026. With that, I'd like to turn the call back over to Joey. Thank you, Peter.

At this time, operator, we'll open it up for questions.

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. Complete yourself to two questions during the call. We'll take our first question from Smeeds Rose at Citi.

Thanks. It's Nick Joseph here with Smeeds. Appreciate the color around the treasury method for the forward equity, but can you just walk through what's required in terms of the actual timing and settlement just given the upcoming expirations around the forward equity?

Sure, Nick. This is Peter. In terms of our outstanding forward equity, we have about 14 million shares of forward equity outstanding as of the end of the third quarter. Roughly six million of those shares that the contracts mature on at some point during the fourth quarter, And so we anticipate settling those shares, those 6 million shares, at some point during the fourth quarter as those contracts come to maturity. As for the remainder of the outstanding forward equity, we would anticipate settling that at some point in 2026.

Thanks. That's very helpful. And then just on acquisitions, I understand the visibility is limited, but it does continue to track ahead of expectations. But is there anything on the horizon that you're seeing right now that could slow that pace that you're currently seeing?

Morning, Nick. It's Joey. Nothing on the horizon that we see that pace slowing in 2025. Obviously, the 10-year Treasury is down to the 395, 396 level, but we haven't seen anything that should slow us down this year.

Thank you.

Thanks, Nick.

We'll move next to Michael Goldsmith at UBS.

Good morning. Thanks a lot for taking my questions. First on the cap rates, the acquisition cap rates actually ticked up in the period, and we keep hearing from others about the pricing landscape, and there's a narrative of increased competition. So are you seeing any of that out there, and how have you been able to navigate some of those headwinds that others are seeing?

Yeah, as I talk about pretty frequently, Michael, I wouldn't get overly enthralled with the narratives that are out there from different institutional acquirers. We haven't seen any material change in cap rates year-to-date through 930 or, frankly, today. What we do is differentiated. It's bespoke. We're doing one-off transactions generally, short-term, blend and extends, different types of transactions. And the output this quarter was 10 basis points higher than last quarter just because of the composition. So, like I said, I wouldn't get carried away in the overall narratives of the largest, most fragmented, at least institutionally owned market in commercial real estate, that being retail net lease.

Thanks for that, Joey. And as a follow-up, the fourth quarter implied AFFO per share is consistent with the third quarter. so any reason why that would be kind of flat sequentially or any one-time items that impacted the third quarter or impact the fourth quarter that uh to to expect that to be kind of consistent i'll turn it over to peter but i don't really see anything i think that the third quarter was fairly front loaded in terms of of acquisition volume nothing overly material there peter we're missing anything no michael the only thing i would add is just in my prepared remarks i did mention that the term fees received during the third quarter which contributed to affo per share

in the third quarter we typically don't receive much in the way of term fees we don't have anything contemplated in the fourth quarter and so as you look at q4 being roughly flat at the midpoint to q3 i think the term fees are a contributing factor there thanks very much good luck with the fourth quarter.

Thanks, Mike.

Our next question comes from Jana Galen at Bank of America.

Thank you. Good morning. Following up on your comments on the growing pipelines for the different external growth platforms, can you talk to how much is current tenants versus new to portfolio and then kind of where you see cap rates trending for 4Q and potentially into 2026?

Good morning, Jana. No new tenants that I can think of that we don't own existing in the 2600 assets we're staying within our sandbox amongst all all three external growth platforms in terms of cap rate trends we'll see how the macro works out again we haven't seen anything different uh to date we don't anticipate any material deviation in q4 our q4 pipeline in terms of acquisitions is very strong i will say that there's a significant component of ground leases in there uh in in q4 and then as we said previously we anticipate breaking ground on over 100 million dollars in projects in the second half of this year obviously that was approximately 50

million dollars in q3 i would anticipate a potential acceleration of that as well into q4 through development developer funding platform thank you joey and then uh maybe for peter you had mentioned in the guidance there's 25 basis points of credit loss can you just kind of update us um where you stand uh as of uh third quarter yeah so in the third quarter we experienced um just under that about 21 basis points of credit loss during the third quarter um to your point for the year we're assuming in our guidance range approximately 25 basis points of credit loss and with only a couple of months left um here in in the the year um at this point most of that is is known or identified at this point again i do want to reiterate i know we've talked about it on past calls but how we think about credit loss here that is a fully loaded number inclusive not only of credit events but also of any occupancy loss related to releasing assets that may not have been tied to a tenant that is any form of distress or having credit issues it also includes not only base rent but any nets associated with any space that we get back and that we're responsible work during a period of downtime. And so a fully loaded number, I think it's different than somehow others in the space think and talk about credit loss. And again, 25 basis points is what we anticipate for the year.

Great. Thank you very much.

Thanks, Anna.

We'll move next to Jim Kammer at Evercore.

Good morning. Thank you. Joey, maybe I should have been listening more carefully. Did you indicate or say that on the releasing activity in aggregate, it was a 104% recovery for the quarter? Or did I mishear that?

That's correct, Jim.

And is that, and what, could you remind what the year to date was? Is that?

You're not, I can't recall.

So we've released 2.4 million square feet of GLA year to date with the recapture rate of 104 percent. And through the first six months of the year, we were also at 104 percent. And so that recapture rate has trended pretty steadily around that 104 percent throughout the year.

Okay, my apologies. Great. And then obviously, Peter, you You mentioned, obviously, you have the new term loan that will be funding here in November probably. There's no, given you have no unsecured maturities, et cetera, as you say, we just think about it as liquidity and you either put it in cash or just pay down the line. There's no real target use for the funds immediately.

Yeah, so we'll close on that term loan in November. We have a 12-month delay draw feature on that term loan, and so we don't necessarily need to draw down the proceeds right away. We have flexibility there. In terms of when we draw those proceeds down, what the intended use is, we do have about $390 million of outstanding commercial paper notes as of the end of the quarter. And so, I think the intended use will be to pay down short-term borrowings with any remaining funds used to fund incremental investment activity.

Great. Thanks for the clarification. Thank you. Thanks, Jim.

Next, we'll move to Linda Sy at Jeffries.

Hi. With the ground leases being a bigger portion of the 4Q acquisitions and 10% of the overall portfolio ABR, any thoughts on how much you want to grow this piece of the business?

We'd love to continue to grow it, Linda. We're going to do so opportunistically. If we find opportunities that obviously hurdle qualitatively and quantitatively, we're going to strike. Like I said, there are a number of ground leases, a much higher percentage in Q4 currently. That could change here as we wrap up sourcing for Q4 over the next couple of weeks. But they're just opportunistic sellers here generally that we're finding opportunities, both institutional as well as individual sellers.

Thanks. And then I know you said, you know, the term fees are always minimal for you always, but would you be okay sharing who the retailer was in 3Q?

Yeah, that was two advanced auto parts stores that we like the real estate and we are actively working on re-tenanting those assets um you'll also notice we divested of a few advanced auto parts during the quarter as i mentioned during the prepared remarks so just can just continue to diversify the portfolio and take advantage of opportunities thanks we'll move next to ometeo ocasania at deutsche bank yes good morning everyone um good to see you guys firing on all cylinders.

The credit rating, the upgrade, could you just talk a little bit about how you expect that to ultimately impact your cost of debt? Are you suddenly 25 bps tighter? Or how do we kind of think about that as a pertain to your long-term debt and maybe term loan funding?

Sure. I think with the receipt of the A- rating from fixture in the quarter, we saw an immediate improvement on our existing 2029 term loan, where we saw five basis points to pricing improvement there. We were also active issuing commercial paper during the quarter, and we saw a similar pricing improvement on commercial paper issuance after receiving the A- rating. As we think about long-term debt issuance in the public markets going forward, I certainly think the A- rating helps. I think it's validation of the manner in which we built the company in a very conservative manner, the strength of our balance sheet in our portfolio, and frankly, what we hear from fixed-income investors about how they view the credit today. And so I think in time that will allow us to continue to compress spreads and achieve better pricing in the public unsecured markets when we come back to those markets. But we've seen immediate price and improvement on our term loan and commercial paper issuances here as well.

That's very helpful. And then on the DFT side, could you just talk a little bit about, again, you're ramping up pretty nicely. You guys have put out a really good target for that business, which implies a decent amount of growth and demand. I mean, probably every other property type, everyone's kind of talking about development is really, really hard, whether it's due to construction costs or what have you. So, you could just talk a little bit about what's driving all of a sudden, you know, your ability to kind of ramp up that business.

Yeah, just to clarify, when development, we talk about the Speedway projects and the Prepare to Marks. Those are true development projects. We're working hand-in-hand, the team here, with 7-Eleven Speedway, everything from site selection. to entitlements and permitting a and e overseeing construction and turning over so that's true organic development projects agri-realty working with 7-eleven hand and glove the developer funding platform is really being utilized as a as a bridge for developers to get projects complete and many of these many of the times in the developer funding projects usually we're providing the capital it's more of a financial structure we own the asset upon completion the developer is able to obtain a tiff to help make his numbers work or her numbers work on their side of the equation or or will retain out lots or ancillary or ancillary real estate um where they see eventual upside i will note both pipelines have uh both platforms excuse me have deep pipelines there are some fairly large projects also in both platforms right now that It could hit in Q4 or due to entitlement and permitting issues could hit in Q1. That's why we've got kind of a wide stance there in terms of what we're anticipating. But that number could be well over $100 million or could move into, for the back half this year, as I mentioned, or could move into Q1 really out of our control, third-party municipal and governmental control there.

Great. Thank you. Thanks, Tav.

We'll move next to John Kielachowski at Wells Fargo.

Good morning. Maybe just starting off, given the distress we've seen in autos this year, I think there was a BK announced this morning for a subprime lender. How do you think about your exposure there? And are there any of those tenants entering watchlist territory for you?

No, I think the subprime lending market actually plays into our thesis on, frankly, auto parts. The distress you're seeing in those borrowers is every day is a new record for cars on the road. So auto parts obviously is a substantial part of our portfolio, being number five in terms of sector concentrations at 6.8%. We're amongst O'Reilly's and AutoZone's largest landlords and partners. I'll be down in O'Reilly pretty soon with the team here. We continue to work with leading auto parts operators and obviously Gerber Collision as well. But I think that really plays into the hands here. We're not owning new car dealerships. That's not our business. And so we're really focused on the age of the cars on the road, the durability of the cars on the road, and ultimately the fungibility of the boxes of the real estate that we're acquiring. So we've put a white paper out on that. It's on our website, and I think we've stayed aligned with that thesis.

Got it. That's very helpful. And then maybe jump into the 7-Eleven developments there. Are those discussions for new builds on a one-off basis, or is there any sort of visibility in a larger opportunity set there where you have some idea of what the runway is?

The latter. We're working with 7-Eleven in defined geographic territories and have a pipeline of opportunities behind this.

Got it.

Thanks, John.

Next, we'll move to Rob Stevenson at JANI.

Good morning. Joey, given the spreads on developments over comparable acquisitions and the fact that these already have tenants in place, what's the limiting factor for you today in terms of growing that beyond the sort of $250 million in the external growth story? Is it the construction partners and finding those? Is it targeted tenants and their expansion or just a reluctance to make this too big of a percentage of the balance sheet?

No, again, we're not doing anything on a speculative basis here. We know our returns when we go into the project here. So we have everything in hand when we close, including a guaranteed maximum price bid from a general contractor that contract is executed. the only limiting factor is opportunities. I'd love to grow it, commensurate, obviously, with the returns being appropriate. I would love to grow it more. And I think you've seen this material acceleration in these platforms. We hope to continue to material accelerate it further. And as I talked about, there is a deep pipeline behind this where we do have visibility. These are projects that generally take 12 to 18 months.

It's not like acquisitions where we turn and burn in 67 days um and so we are working actively through site selection permitting entitlements we've closed projects uh subsequent to the quarter end um and we will close more projects this quarter first quarter and second quarter uh we're next year okay and then in terms of conversations with major tenants anybody changing um or thinking about expanding or shrinking the size of their prototypical boxes for example you know a typical 10,000 square foot tenant wanting to downsize towards 7,500 square feet going forward or upsizing to 15,000 any sort

of material changes to any of your major tenants boxes preferred boxes going forward no it's a great question tenants are always tinkering with their prototypes and square footages for those different prototypes. We've seen Target move to a larger prototype, obviously. There's always nothing material in terms of just quantity of tenants changing prototypical structures. What we've seen over the last few years, frankly, is more of the BOPUS elements here and the pickup from store, the parking spaces, the drive-thrus, the pickup windows. Those are the types of elements we've seen a lot more change than prototypical size.

Okay.

Thanks, guys. appreciate the time this morning thank you rob we'll go next to spencer glimcher at green street thank you um maybe just another one on the development front um in your conversations with these clients are you getting a sense of future growth appetite beyond these initial projects that are either commenced or in some form of zoning or entitlement and then if so how much confidence does this give you in your ability to achieve those annual dfp goals that you outlined Joey.

What we hear from major tenants and the largest retailers in this country is they want to grow, grow, grow, grow, grow their store base. And I think I talked about it on the last call. There was too much attention in terms of both physical attention, mental attention, and capital turn to distribution for e-commerce. And what all retailers have now realized, the store is the hub of a successful omni-channel operation and not just a spoke. And so whether it's auto parts or off-price, Walmart, Costco, BJ's, Home Depot, Lowe's, all the way down, obviously, to the fast food operations that we're seeing today, C-stores growing voraciously across this country is the continued expansion mode, even in the face of tariffs and construction costs and the other macro challenges that are out there. Will you repeat the second part of your question, Spencer? no well i was just asking if if you had a sense of their like near-term growth appetite if that gave you confidence in in achieving those annual dfp goals you know the few hundred million that you want to put to work in that vertical yeah look we we were lucky enough to have the president of a major off-price retailer up here speak to our board and talk about their growth ambitions with but they're differentiated banners recently to the entire real estate team. Yeah, that gives me confidence. What also gives me, I think, the most confidence is our capabilities and our team here and the fact that we can that we can that we can effectuate all three growth platforms. And I'll tell you, I think what we've created here, and I talked about this a little bit on the last call, is a different type of net lease company. And I think it's imperative now that the sell side and the buy side start being discerning about the types of net lease companies. I know it's easy to group companies, obviously, in property types and sectors. But we have companies in the net lease space that are high-yield spread investors, that are salary-backed organizations, that are global investors across asset classes. And now we have Agri Realty, which is a real estate company that happens to be in the retail net lease space. And so when we talk about these other two platforms and acquisitions is in the focus, obviously that's predominance of the investing capital we'll put to work this year, and I assume next year and the year after. It's not typical spread investing anymore. And I talked about it. I grew up on a site moving dirt, and the goal was always to create that real estate company in the net lease space. And so we started as a developer, and it's quite ironic. We launched the acquisition platform, and we had never acquired a property in 2010. Development kind of dropped off the radar, but was still a small piece of what we were doing at the time. Today, we're in a position where we can invest and have invested in all three platforms, and they are firing on all cylinders. And I think it's time for everyone to use, hopefully, a different, I would hope, a different lens when they're viewing net lease companies than just multiple spreads, because we have a lot of different types of businesses on operation and, frankly, investment philosophies in this space. And what we're doing today is differentiated. It's been 15 years in the making, as I've talked about in prepared remarks. And it's here and it's here now. And so we're excited about development. We're excited about developer funding platform. We're excited about acquisition platform. And I'll tell you, retailers are just as excited with us that we can help them grow across all of those different efforts.

Okay, great. Thank you for that color. And then maybe just one on the ground lease front. You've recently had a really favorable releasing outcome with an existing ground lease. Can you just remind us if you have any other near-term lease maturities, and would you expect to have similar favorable outcomes?

We have a few that are what I'll call naked leases, don't have any options, nothing overly material. We have had a vacant brinker ground lease, brinker-backed ground lease sitting out front of a former Borders that my father developed, which is now a Walmart neighborhood market, which is shorter term in nature. But nothing overly material in 2026. There will will be a significant mark-to-market opportunity.

Okay.

Thank you.

Thanks, Spencer.

We'll go next to you, Pell-Rana, at KeyBank Capital Markets.

Great. Thanks for taking my question. I want to get your stance on the current consumer environment, given continued ambiguity on the macro tariffs and softness in the jobs market. Have you noticed any impacts starting to creep into any of the industry categories you have exposure to? You already mentioned auto parts earlier, but any other categories that you're seeing any impact?

I think we're seeing positive flow through for the last majority of the categories we invested. And so we're not doing entertainment. We're not doing experiential. We're not doing anything fun. We are the trade down. We own the trade down. Walmart, TJX, auto parts, right? So we focus on the trade down. And so our tenants are the beneficiaries, generally speaking, of that trade down effect. And it continues to permeate, I think most notably right now, the middle class. The Target customer is shifting to TJX and Walmart. We see that in their prints. And so that middle class customer is trading down to our tenant base. We love Target. I think we own two or three, three of them, but we see that customer trading down, looking for savings, and being a more discerning shopper today.

Great. That was helpful. And then, you know, are you seeing an impact on the accelerated depreciation policy from the big, beautiful bill, you know, creeping in as well on the transaction market or the 1031 market?

Not in any spaces we follow. maybe in the car wash space where you get the accelerated depreciation with 1031 or private investors, maybe on the edges on the C-store space, but nothing overly beautiful. Okay, great. Thank you. Thank you.

We'll take our next question from Eric Borden at BMO Capital Markets.

Hey, good morning, everyone. Just going back to the forward equity contracts, Peter, can you remind us if the forward equity in place has to be settled before the date of expiry, or can those agreements be rolled forward?

Yeah, I think there's certainly the opportunity to go back to the banks or counterparties to extend those contracts if we thought that was the appropriate thing to do. I think for a few reasons, we think it makes sense to settle our upcoming forwards at maturity. First and foremost, it's not like we're going to be sitting in cash when we settle that forward equity. We have 390 million of short-term borrowings outstanding as of quarter end. And obviously, as we continue to invest, that number will grow. And so, I think there's a use of proceeds for the forward equity settlements that we have contemplated here in the fourth quarter. And I think there are other considerations as well when you think about extending those contracts from a rating agency or leverage perspective.

Okay. Thank you. And then can we just get your early thoughts on the Series A preferred shares that can be redeemed in September of next year?

We think that is a very attractive piece of paper today, and I would not anticipate that that gets called anytime in the near future, given the coupon on it, which was the lowest REIT coupon in history for preferred outside of PSA, and we continue to view that as an attractive piece of paper. All right. Thank you very much.

Thank you.

Next, we'll go to Brad Heffern at RBC Capital Markets.

Yeah, Warren, thanks, everybody. Joe, you talked about cap rates not really changing in a material way. I'm wondering why you think that is. I mean, obviously, we've seen cost of debt come down quite a bit. So far, it's hopefully moving lower. And we've heard these anecdotes about increased competition. So, were spreads just anomalously narrow before, and they're getting back to normal levels now? Or is there something else that you would call out?

Just to clarify, Brad, I'm not predicting cap rates for 2026. I'm just talking about my visibility into 2025. By the time I had any visibility into 2026, we'll get a new true social post and something will change. So I'm not predicting it. We just haven't seen any material changing cap rates year to date, and I don't expect it in fourth quarter of 2025. Obviously, things outside of our control will drive that overall narrative, but we'll continue to try to look for opportunities to push cap rates and obviously only transact where we think the the appropriate uh pricing levels are okay got it um and then i know you've had kind of a self-imposed hiatus on new equity issuance since the the april offering and obviously you have you know plenty of equity as you sit here today but i'm curious how you view the attraction attractiveness of equity right now and when you might look to issue again i appreciate the uh self-imposed hiatus i I hadn't thought about it that way. When we did that deal, we promised investors, and we stick to our word here. Consistency is the third slide in our deck. We told investors, we're not coming back, right? And that's what we've done. We obviously don't need to raise equity at three and a half times levered and a billion seven, Peter, in liquidity. Is that correct?

A billion nine or 2.2 billion, including the term when it closes.

So we obviously don't need to raise any capital. The term loan, as Peter mentioned, the delayed draw feature of that term loan gives us a lot of flexibility. And so when we raised that echoey, I guess we did put on a self-imposed hiatus. But I think the most important piece of that was that we stayed true to our word to investors, that we were going to constantly be flooding the equity markets with new issuance, whether it would be the ATM or obviously a block or overnight transaction. We'll continue to look, obviously, we're an external growth-driven company as a net lease We are growing voraciously. We'll continue to look at all different types of access and sources of capital. But we're in the pole position here. Peter, we can spend how much until we got to five times, Lever?

We could spend approximately $1.5 billion, excluding free cash flow, until we get to five times. We can execute on the high end of our investment guidance range this year without raising any additional equity, and we would end the year at four times pro-for-one net debt to even us. So we have plenty of runway, and we're in a great position.

So you add in free cash flow next year of over $125 million, minimally, And then you add in disposition proceeds, and we clearly don't need a dollar and no debt maturities. We maintain full flexibility. I think the most important thing to – I appreciate, again, the self-imposed hiatus was we want to be consistent with investors so they understand where we're going and what we're doing. This isn't that least. It should be predictable.

Our next question comes from Wes Galladay at Baird.

Hey, good morning, guys. I want to have a question on the True Development platform. Are you willing to develop for all your targeted tenants or do you view some as being, you know, a little bit more risk or too complex?

Interesting question. Complexities certainly would not be an issue. We generally stick to rectangles. Those aren't overly complex. We're not building anything overly difficult. Yeah, I think we would. I can't think off my hand of one we wouldn't develop for. Again, all three platforms are targeting the same tenant base. And so will we do industrial for those retailers or distribution? No. But will we develop their traditional retail formats? Certainly. I'll tell you, we have been approached to develop in Canada. That's a no. We have been approached in other instances to try new prototypes or concepts. That's generally a no as well. We're not interested in 180,000 square foot sporting goods experiential constructs. And so, but I think I would tell you for 95% of them, yes, we will develop, we will use our developer funding platform, and we will acquire a third-party or sale.

Okay, thank you.

Thank you.

Next, we'll go to RJ Milligan at Raymond James.

Hey, good morning, guys. Joey, just wanted to get your higher level views as we look into 26. Third quarter, investment volume jumps quite a bit. You've got all the growth platforms that are delivering. You've got, as I said, debt and equity lined up with the forwards and the term loan. Guidance for this year is about $1.6 billion of investment volume.

And so two questions.

Would you want to do more next year in terms of investment volume? And two, is the gating factor really what's just available on the market, or is there like a number of incremental investment activity that just doesn't deliver enough so you'd want to smooth it out? I'm just trying to gauge what levels of investment volume are you comfortable on a longer-term basis.

A great question, RJ. We have never thought of pacing here. We don't do pacing. We take advantage of opportunities. We turn windows into doors and then we sprint through them. And so whether it was COVID or whether it was a disruption from a macro perspective or when we launched the acquisition platform, if we find a $5 billion transaction that fits this company's profile from a quality perspective and provides for accretive spreads and making up the number five billion obviously we will strike um and so i don't think of any gating factor except qualitative and quantitative hurdles we have a cost of capital we now have 93 team members here we are 90 team members excuse me we've hired 23 new team members this year hence the increase in the in in gna as a percentage of revenue and the updated guidance We don't anticipate anything like that. We are built to grow. The only thing that will limit that growth is opportunities, and we will not stretch That's helpful.

That's it for me, guys. Thanks, RJ.

We'll go next to Rich Hightower at Barclays.

Hey, good morning, guys. Thanks for taking the question here. I guess, Joey, just to continue the line of thinking from the last question, you just talked about it, and you've talked about it before, sort of increasing the size of the investment team. And so I guess, you know, all else constant does that. Is it reasonable to think that that implies you can sort of continue along the pace of acquisitions and other deal volumes, you know, that you sort of paced it in the third quarter going forward? Or is that not the right way to think about that?

Well, I think the size and scale of the team is to accommodate all different types of transactions that we're managing, and we don't see that as a constraint. Again, it's opportunity dependent. Q4 will be a strong quarter for us. We know what development in DFP looks like going into 2026 for the first half right now. And that looks strong. But again, we are able to handle 400 discrete transactions. We had 110 transactions, not including dispositions releasing in Q3 alone. And the team has incremental capacity. We continue to invest in systems. We're launching arc 3.0 in 2026 we continue to lean out processes and eliminate waste inefficiencies here and the team continues to get better at all levels we built redundancy in succession so we're in a great position to take advantage of those opportunities in terms of how it materializes into numbers and volume that's going to be subject to what we find the grit determination that we put forth and in context of the overall marketplace okay that's uh that's up and then one one just small one i did notice um i guess your exposure to dollar tree uh fell quarter on quarter um to just maybe talk about the moving parts there was that part of the

the group of assets that was sold and maybe just talk about you know how you feel about the dollar or concept in general kind of relative to everything else that you own if you don't mind Yeah, the bulk piece of that is the separation of family dollar, obviously, from Dollar Tree with that sale.

We've also made a couple of dispositions. Dollar stores, I'll note, year over year have dropped 87 basis points as a component of our portfolio. Similarly, pharmacy has dropped 30 basis points from 4 to 3.7%. We will continue to be extremely discerning. We're not going to increase exposures, especially in any material way, to either of those sectors. If we find a unique opportunity, we will strike. But they're certainly not at the top of our list in terms of new investment appetite. Understood. Thank you.

We'll move next to Ronald Camden at Morgan Stanley.

Hey, two quick ones. just going back on Tenant Health, 25 basis points, I think baked into the guy. I think that's lower from last quarter. Is that part of the sale of the at-home? Just maybe talk through that in just general color of, I know we've talked to a few tenant groups, but how are you feeling about Tenant Health today? Thanks.

To the at-home question, that was an opportunistic sale. We bought that seven years ago, I think, Peter, correct me if I'm wrong. Seven years ago, was a straight real estate play. It was directly across from a mall. It was to be redeveloped in a high growth area, obviously Provo, Utah, at a signalized intersection with outlaw capability to be developed in the future at a very, very low basis, effectively below land basis. The purchaser of that at a seven cap is going to do multifamily for BYU, which is just north. And so it obviously worked out for us in terms of the acquisition and disposition. Again, I think that's emblematic of our real estate vision here. We were never and will never be focused on at home or secondary or tertiary home furniture and accessory retailers. In terms of the 25 basis points, Peter, you want to add anything color there?

Last quarter, our guidance contemplated 25 basis points of credit loss at the high end of our FFO per share range and 50 basis points of credit loss at the low end of the range. So we have tightened that up to 25 basis points, and that compares to the 50 basis points of credit loss that we assumed in our initial guidance range going back to February. And so as the portfolio has continued to perform very well and we haven't realized that higher level of credit loss, we've continued to trim up and bring down our assumption for credit loss for the year.

Great.

And then just back on the cap rate question, I know it's going to ask a bunch of different ways but maybe can you comment on any sort of larger deals or larger portfolios and what you see in terms of cap rates there i will say we have passed on a couple larger deals and i'm sure you'll see hit the wires that we didn't think were priced appropriately um most notably sell leaseback portfolios uh we think we can create more value uh through alternative means uh including development um but that's uh that's really only the color i can give thank you thanks ron and we'll go next to linda syatt jeffries hi just to follow up to an earlier

question um given your investment levels reverting back to historical highs i just want to confirm are you growing the investment team or is the investment team getting more productive with the technology like ARC?

Both. We have grown the investment team. Again, that's part of the 23 team members that we've added this year. We have grown the investment team, all three platforms, all the way down to the analyst level and interns that have become analysts. And so we feel like we're fully staffed that team. We continue to make IT improvements from the use of AI for lease abstraction and lease underwriting checklists and continue to work on ARC 3.0. but we think that team has been built and we're but we'll continue to coach obviously coach and develop the younger team members so we're in uh we're we're in position for 2026 and i don't already anticipate any any material hires there thank you thanks linda and that concludes our q a session i will now turn the conference back over to joey agri for closing remarks Well, thank you, everybody, for joining us. We look forward to seeing you in Dallas for any upcoming conferences, and good luck through the rest of burning season. Appreciate it.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.